Oil up over persistent supply fears as more sea-faring vessels avoid Suez Canal

By Sibel Morrow

Oil prices climbed on Friday, with Brent once again trading over $80 a barrel, as shipping disruptions in the Red Sea continued to raise concerns over the security of global supplies, while markets weighed Angola’s plans to leave the Organization of the Petroleum Exporting Countries (OPEC) group following disputes over future production caps.

The international benchmark crude Brent traded at $80.13 per barrel at 0710 GMT, a 0.93% increase from the closing price of $79.39 a barrel in the previous trading session on Thursday.

The American benchmark, West Texas Intermediate (WTI), traded at the same time at $74.59 per barrel, up 0.95% from Thursday’s close of $73.89 per barrel.

The recent attacks by the Yemeni Houthi rebel group on sea-faring vessels in the Red Sea are continuing to negatively impact global trade. Supply fears have now intensified in the markets after reports of more vessels avoiding transit through the Suez Canal.

The shipping company Kuehne and Nagel said it had identified 103 ships that had already changed course, with more expected to circumnavigate South Africa’s Cape of Good Hope.

Investors are currently trying to assess the possible impacts of Angola’s announcement on Thursday of its plans to quit the oil producer group, OPEC.

As an OPEC member since 2007, Angola produces over 1.1 million barrels per day of crude oil. The southern African country is the second-largest oil producer on the continent.

The country's oil minister, Diamantino Pedro Azevedo, announced the decision on state broadcaster TPA, saying the decision was not taken lightly, but OPEC membership no longer served the African country's interests.

Earlier this month, the OPEC group announced updated production quotas for some countries as agreed during the previous ministerial meeting in June.

According to assessments by three independent sources, including IHS, Wood Mackenzie and Rystad Energy, production levels in Angola, the Congo and Nigeria were set at 1.11 million bpd, 277,000 bpd and 1.5 million bpd, respectively.

The decision led to a four-day postponement of the group's latest meeting on Dec. 4, the longest delay of a meeting in OPEC's history. Some countries' dissatisfaction with the revised production quotas was the reason for the postponement.

Experts voiced concerns over the possible knock-on effect of Angola’s decision that jeopardizes the fate of the group amid ongoing fears about its shrinking market share.